In many Eurozone countries, private sector debt has decreased in recent years and so has the vulnerability of the private sector to higher interest rates. Yet in many countries debt remains high and in several countries vulnerabilities are still present.

Despite deleveraging in recent years, private sector debt remains high in many Eurozone countries. The private sector in Cyprus, Greece, Ireland, Portugal, Spain, Finland and Luxembourg is most vulnerable to higher interest rates.

The economy of Luxembourg took a positive turn in 2013 and the already strong fiscal position improved. However, in the longer term, the country needs to deal with challenges such as legislative harmonisation at the EU level and rising ageing costs.

Although Luxembourg’s austerity effort is limited, in combination with the slow recovery in the eurozone, it will hamper economic growth during 2013. Supervisory reforms might have an impact on its position in the international financial sector.

Economic growth was very disappointing in 2011 thanks to the weakening of global activity and European debt crisis. Going forward, Luxembourg's growth performance is unlikely to return to the lofty levels witnessed earlier this decade.